Sony Hits The Hardware At Gamescom

| About: Sony Corporation (SNE)


SNE reports 10 million consoles sold since November, giving them an early lead in the console wars.

Announces Share Play, allowing users to share games online without buying additional copies.

Didn't blow anybody away at Gamescom 2014, but lead over MSFT, Nintendo made it unnecessary to do so.

While Microsoft (NASDAQ: MSFT) continued with its game-focused marketing drive at Gamescom 2014, Sony (NYSE: SNE) tried to differentiate themselves by promoting hardware and software upgrades to the PlayStation 4. Considered by many video game insiders as the premier console for hardcore gamers, and trying to keep their lead over their main rivals Microsoft and Nintendo, Sony's strategy at Gamescom was simple: keep the lead by worrying about constant improvement while the other guys played catch up.

While Microsoft was busy mending bridges with the gaming community over a year after the public relations nightmare regarding the Xbox One's launch, Sony was able to keep its loyal customers satisfied by simply doing the opposite of what Microsoft was doing. Initial PS4 prices were $100 less than the Xbox, and users could share games without paying a fee. Also, the extensive library of PS3 games and wider global distribution upon launch gave Sony a huge boost after E3 2013. This forced Microsoft into the position of walking back many of the changes that they made, including making it easier to share games as well as allowing limited backwards compatibility, but by then Sony had a firm grip on the title of most coveted 8th generation console.

The better lead-up worked out for Sony, which announced last week that it sold 10 million systems since the November launch, which was double what Microsoft sold of its console and roughly 3 million more than Nintendo's Wii U. More importantly for investors, Sony has been able to turn a $41.8 million profit off these consoles even with the comparatively cheap $400 price tag, something the company struggled to achieve with the PS3 despite high sales figures. However, this is only the first year of what might be a decade-long tug of war if the previous generation is any guide. The last generation was won by the Nintendo Wii with 101 million units sold, so Sony still has a long way to go to claim the title of best-selling game system, and gives competitors a lot of time to catch up.

To keep their distance, and to stay current, Sony doubled up on free game sharing with a new program called Share Play. This new software will enable users to share whatever PS4 game they want online with their friends without them needing to buy a new copy of the game. While not new by any stretch of the imagination (Blizzard Entertainment had been doing this for nearly a decade with Internet games), making it applicable to console games is a welcome new development in the industry. With new games running at around $60 for consoles, enabling multiple people to use the same disk online encourages more interactive gameplay, which turns into more sales of online packages.

The development of Share Play is good for Sony's image because Microsoft is busy promoting exclusive games and independent studios to create a gamer-friendly image, and this helps Sony stay one step ahead. With Sony coming out with exclusives like Bloodborne, Until Dawn, Wild, Uncharted 4, and a new Silent Hill game, the ease of sharing will increase online game play as well as increase enthusiasm for new games. Sales will likely not be hurt, because sharing online is still limited in scope compared to playing a campaign on one's own copy of the game.

Sony didn't blow people out of the water in Cologne this year, but they didn't need to. The sales figures and their lead in the console wars do most of the talking.

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